ACTIVITY BASED COSTING Definition

ACTIVITY BASED COSTING (ABC) is a costing system that identifies the various activities performed in a firm and uses multiple cost drivers (non-volume as well as the volume based cost drivers) to assign overhead costs (or indirect costs) to products. ABC recognizes the causal relationship of cost drivers with activities.

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FRINGE BENEFIT an incidental benefit awarded for certain types of employment (especially if it is regarded as a right) (Example: employer supplied health insurance or two weeks paid vacation per year).

MATCHING PRINCIPLE see MATCHING CONCEPT.

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